Numerous regulatory proteins are tightly controlled by ubiquitin conjugation and deconjugation and deviations from this dynamic process are manifested in clinical disorders such as cancer, inflammation, neurodegenerative disorders, and metabolic diseases. The deubiquitylase (DUB) USP7 plays multiple regulatory roles, all of which are pro-survival/antiapoptotic. One of its most intriguing roles is the furtherance of immune-evasion, whereby tumors employ various mechanisms to escape detection and killing by the host defense (T-and NK-cell mediated) immune system. Abrogation of tumor tolerance induction has become a leading anticancer strategy, as it should in principle work on a broad spectrum of cancers. Clinical activity of antibodies to two receptors that trigger suppression of T-cell defens (CTLA4 and PD-1) has led to USFDA approval of three biologicals for treating melanoma. While the strategy is valid, opportunities for improvement of the therapeutic index exist in the areas of mechanism (multiple mechanisms can lead to tolerance, suggesting that combination therapies will be needed for maximum efficacy) and treatment cost (a serious issue especially with biologicals). The involvement of USP7 in sustaining immune evasion immediately suggests a therapeutic strategy - inhibitors of USP7 destabilize the transcription factor Foxp3, which is needed to activate a population of Tcells (Tregs) that limit activation of tumoricidal T effector (Teff) cells. Thus a USP7 inhibitor should break Treg-induced tolerance allowing Teff cells to kill the tumor. In Phase I, Progenra's selective USP7 inhibitor P5091 was confirmed to diminish Foxp3 stability and eliminate Treg cells' ability to induce tolerance by down-regulating Teff cells as predicted. Moreover, P05091 mediated anti-tumor activity in the AE17 mesothelioma syngeneic tumor model only in immunocompetent mice, thus suppressing tumor growth in this model by inhibiting T cell anergy and not by direct cytotoxic effects of the kind observed in other models. Also in Phase I, the potency and drug-like properties of P05091 were improved by the generation of a series of compounds with EC50 ~100-200nM while maintaining selectivity and efficacy in cellular and in vivo proof of concept models. In Phase II, lead optimization will focus on further improvement of pharmacological properties; PK, toxicology, and efficacy studies will guide chemical synthesis. The goal is to identify potent and selective compounds with efficacy against lung cancer and other tumor models with the ultimate commercial goal of initiating clinical development.